Questions from Social Liberal Forum Members to The Rt. Hon Dr Vince Cable, January 2011

Thursday, 10 March 2011

Jon asks:
The last serious survey on the subject, about 10 years ago, showed that graduates earn on average some £600,000 more than non-graduates over their working career. I don’t think there can be any debate about the fairness of students contributing about 3 to 4 per cent of the cost of their passport to greater riches. It would be regressive taxation for poorer taxpayers to have to shoulder the burden. The real issue is repayment, and when. It should be seen not as a discouraging short-term debt, but as a long-term investment – a kind of career mortgage, to be repaid over a similar period. Why can’t the government accept and implement this?

Jon, I believe what the Government has implemented is like a mortgage but with more protection built in for low earners - unlike a mortgage debt lower earners will not have to pay. Graduates will pay for 30 years or until they have repaid the amount they borrow dependent on their income once they earn over £21,000. If their earnings rise, the amount they repay and the interest they accrue increases and if their income drops payments decrease.

Sarah asks:
Within the cabinet, how was the cut to the teaching grants decided?

As part of the spending review process I and other ministers carefully considered all the spending done by the business department. We had to reduce spending significantly and had to look at radical ways to protect services. In the case of Higher Education we knew that graduates enjoy a lot of the benefit from higher education; we judged that increasing the contribution they make we could protect the ‘amount’ of higher education available while contributing to the deficit. We were also able, as a result of difficult decisions on Higher Education budgets, to afford some protection to further education which has been stripped back under the previous Government and protect science which is crucial for growth. Overall university funding has been cut by 25% along with the department average.

Alan asks:
I am a 2nd year student studying Politics and Economics at a top 10 British University. In the first year of my degree, my lecture attendance rate was less than 10% (I was a PPC, worked for a local party and chaired an SAO!). Yet I still achieved 59 for the year - that 59 of course does not count towards my degree classification. Indeed for my "Great Political Texts" module, I read not a single text and attended 2 of the 10 lectures, yet I received 60 for the module. And despite barely participating in my course last year, I am expected to get a 2:1 for my degree. This is not me boasting - this is true for many students across the country, I don't claim to be any exception. Why are you going to expect an undergraduate to pay £9,000 for a years tuition which they do not need to attend? I cannot understand why the government has ducked much needed University reform such as getting rid of the first year of most degree courses, moving vocational courses to an on-the-job business setting and other measures to save money. Why are we moving the cost of this inefficiency onto the student, rather than tackling it head on?

As part of our reforms we will be putting far more responsibility on universities to account for the prices they charge. They will have to publish detailed information about teaching time and employability rates of their graduates to justify the value for money they offer students and they will have to cater to student demand far more now that a greater proportion of their income flows through the student rather than direct from the Government.

Janet asks:
Was the option to delay our commitment to reducing fees considered and if not why not given that the impact on deficit reduction would have been negligible during this parliamentary term?

We looked at all the options such as a graduate tax, cutting student numbers or cutting funding for universities with no means of replacement and found that none of the alternatives were workable or desirable. We did not want to deprive tens of thousands of young people a university education or see the quality of that education deteriorate so we could avoid a very difficult political decision. We could not find a way to ensure that we could collect a graduate tax from people who moved abroad or EU students.
Cutting the deficit has to be sustainable; our plans close the gap between government income (tax receipts) and government spending in the next 4 years but they ensure the gap does not reopen in years to come.
Our plans to reduce the teaching grant to universities reduces government spending in this parliament but by increasing the income related loans to students we allow the number of student places and standard of teaching to remain the same and the repayment system protects low earners. In the first few years of the system government outgoings in loans will be increasing but as they are loans, the majority of which will be repaid, they do not contribute to a gap between Government income and spending over the long term and are accounted for differently on the Government balance sheets.

Peter asks:The government has spoken about shorter degree courses for students; two years instead of three. Are you aware that universities are increasingly moving to four year courses with one year on an industrial placement (charging tuition fees for all four years, although reducing the amount for the placement year)? How does that fit in with the two year course proposal, which it seems to completely contradict?
Also, why wasn’t the NUS pledge included in the coalition agreement? Many people, particularly students, potential students and their parents, saw the abolition of tuition fees as a flagship Liberal Democrat policy, for many of them it was THE flagship Liberal Democrat Policy that led them to support us. The Policy Response team said that the NUS pledge was consistent with Party policy, which is clearly true, but despite both these points it wasn’t in the coalition agreement.

To take your first point, I have not suggested that all degrees should be two years but that universities should respond to what students want. I think that sandwich courses with a year in industry are good for students looking to go into a specific industry and can provide invaluable experience relevant to their studies. The Government does not want to micromanage universities and what they offer but give students the power and information to demand a more responsive system.
On your second point, during the course of an election campaign MPs and candidates sign many pledges – they are devices by campaign organisations to build the profile of their causes and get political support for it. The NUS pledge clearly was clearly more significant than most but it would not have been appropriate or wise to pick campaign pledges as a basis for Government. The Coalition Agreement’s conditions for creating a system of student finance were far more comprehensive than the NUS pledge as they included increasing social mobility and attracting a higher number of students from disadvantaged backgrounds.

Nigel asks:
1. How will the change in HE funding reduce the deficit when it is clear from various analyses (IFS, Million+) that the cost to the exchequer is likely to be higher not lower in the years through to 2015?
2. In the light of this, how can we justify the move from funding by the taxpayer to funding by the graduate? Is this not simply an ideological choice, and one that is contrary to agreed party policy?
Cutting the deficit has to be sustainable; our plans close the gap between government income (tax receipts) and government spending in the next 4 years but they ensure the gap does not reopen in years to come.

Our plans to reduce the teaching grant to universities reduces government spending in this parliament but by increasing the income related loans to students we allow the number of student places and standard of teaching to remain the same and the repayment system protects low earners. In the first few years of the system government outgoings in loans will be increasing but as they are loans, the majority of which will be repaid, they do not contribute to a gap between Government income and spending over the long term and are accounted for differently on the Government balance sheets.

Prateek asks:
1. Once the decision was made to cut the teaching grant by 80%, it strikes me that more of the cost of a degree could have been passed on to the business sector which demands such high numbers of graduates. Is it feasible to reverse a proportion of the Chancellor's cut in corporation tax to fund part of the cost of tuition? If not, what measures will BIS be taking to encourage business to pay for scholarships, teaching posts and departments?

I agree that employers need to be far more involved in higher education as they, like graduates, do enjoy some of the benefits. The forthcoming White Paper will explore how we get business more involved. There are already schemes running such as the recently announced KPMG programme at Durham University which will pay fees and a salary to accountancy students who will also get work experience at the firm during their studies. We need to do more to encourage such schemes.

2. Some universities will be expected to reduce the cost of delivering their teaching, and shorter degrees have been postulated. What measure will BIS take to encourage greater distance-learning, better use of electronic resources and delivery of teaching through local Further Education institutions to save on costs – or will these measures be left up to individual Universities to implement?

For the first time we are making loans available to students studying part time which will make this option far more attractive to students. Our white paper will explore how we can ensure that FE providers can offer more HE locally at lower costs. Universities will have to publish more information about the courses they offer and what students can expect. As more funding for universities will now flow through students their choices and preferences will shape university behaviour to a greater extent than is currently the case.